Economic Insights
Employment Rates and Wages of Core-aged Workers in Canada and the United States, 2000 to 2017

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This Economic Insights article assesses how employment rates and wages of persons aged 25 to 54 evolved in Canada and the United States from 2000 to 2017. The analysis is based on data from Statistics Canada’s Labour Force Survey (LFS), and on the U.S. Bureau of Labor Statistics’ Current Population Survey (CPS). The study finds that employment rates and real median hourly wages of core-aged workers evolved more favourably in Canada than in the United States during this period.

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Introduction

The Canadian and U.S. labour markets have experienced several structural and cyclical changes of a similar nature since 2000. Both countries witnessed a contraction of their information and communication technologies (ICT) sector in the early 2000s, a decline in manufacturing employment and unionization, an expansion of their oil and gas industries during the oil boom of the 2000s, and an adjustment in construction activities during the last recession.

Some of these changes have been of similar magnitudes in both countries. For example, the unionization rate of employees aged 25 to 54 fell by roughly 4 percentage points in Canada and the United States from 2000 to 2017, albeit from different levels (Chart 1). Manufacturing employment declined by about 25% in both countries during that period (Chart 2).

However, the magnitude of other shocks has differed, often substantially. As the last recession unfolded, the housing market and construction industry were more severely impacted in the United States than in Canada. By the first quarter of 2009, housing starts in the United States were down nearly 67% from early 2007 levels, compared with roughly 39% in Canada. Housing starts in Canada rebounded at a faster pace, surpassing pre-recession levels by the third quarter of 2011. In contrast, housing starts in the United States were still below pre-recession levels in 2017.^{Note 1}

Another important difference between the two countries is the relatively larger role that the oil and gas sector has played in the Canadian economy. In 2014, oil and gas extraction accounted for 5.9% of gross domestic product (in current dollars) in Canada, compared with 1.9% in the United States.^{Note 2} While employment in oil and gas extraction and peripheral activities^{Note 3} accounted for 0.6% of total employment in the U.S. that year, it accounted for 1.3% of total employment in Canada. Since oil and gas industries are relatively more important in Canada than they are in the United States, rising and subsequently falling world oil prices may have had more far reaching effects in Canada than in the United States through of a variety of economic spillovers.^{Note 4}

For these reasons, employment rates and wages might have evolved differently in the two countries since the early 2000s. Using data from Statistics Canada’s Labour Force Survey (LFS) and the U.S. Bureau of Labor Statistics’ Current Population Survey (CPS), the study documents movements in employment rates and wages of Canadian and American workers aged 25 to 54. Because wage and employment movements may have differed for highly educated workers and their less educated counterparts, the analysis document these trends for three groups of individuals: (a) those with a high school education or less, (b) those with some post-secondary qualification below a bachelor’s degree, (c) those with a bachelor’s degree or higher education (henceforth, bachelor’s degree). The study covers the 2000-to-2017 period.

Data table for Chart 1

Data table for Chart 1
Table summary
This table displays the results of Data table for Chart 1. The information is grouped by Year (appearing as row headers), Canada and United States, calculated using percent units of measure (appearing as column headers).

Year	Canada	United States
	percent
2000	36.1	16.5
2001	35.9	16.3
2002	35.8	16.0
2003	35.5	15.6
2004	35.0	15.2
2005	35.2	14.9
2006	34.8	14.3
2007	34.8	14.3
2008	34.2	14.7
2009	34.1	14.4
2010	34.1	14.0
2011	33.6	13.8
2012	33.8	13.2
2013	33.9	13.3
2014	33.1	13.1
2015	33.5	13.0
2016	32.9	12.7
2017	32.7	12.7
Note: Percentage of employees who are union members or covered by a collective agreement. Sources: Statistics Canada, Labour Force Survey; U.S. Bureau of Labor Statistics, Current Population Survey.

Data table for Chart 2

Data table for Chart 2
Table summary
This table displays the results of Data table for Chart 2. The information is grouped by Year (appearing as row headers), Canada and United States, calculated using index (2000=100) units of measure (appearing as column headers).

Year	Canada	United States
	index (2000=100)
2000	100.0	100.0
2001	99.1	93.9
2002	102.1	87.2
2003	101.6	85.9
2004	102.5	83.8
2005	98.3	82.9
2006	93.8	83.7
2007	90.3	82.2
2008	86.0	80.9
2009	77.8	72.6
2010	76.3	71.1
2011	76.8	72.7
2012	77.9	74.5
2013	76.8	75.8
2014	76.3	74.0
2015	76.4	74.2
2016	75.6	75.4
2017	76.9	74.8
Note: The industries are based on the North American Industry Classification System (NAICS). Sources: Statistics Canada, Labour Force Survey; U.S. Bureau of Labor Statistics, Current Population Survey.

Employment rates

From 2000 to 2017, the employment rates of individuals aged 25 to 54 evolved more favourably in Canada than in the United States. During that period, the percentage of individuals employed fell slightly in the United States―dropping from 81% in 2000 to 79% in 2017―but increased by the same amount in Canada, rising from 80% in 2000 to 82% in 2017. This does not simply reflect the fact that the last recession was more severe in the United States. As Chart 3 shows, employment rates were diverging prior to 2008. From 2000 to 2007, employment rates of persons aged 25 to 54 increased by 2 percentage points in Canada but showed no growth in the United States.

Data table for Chart 3

Data table for Chart 3
Table summary
This table displays the results of Data table for Chart 3. The information is grouped by Year (appearing as row headers), Canada and United States, calculated using percent units of measure (appearing as column headers).

Year	Canada	United States
	percent
2000	79.9	81.4
2001	79.8	80.6
2002	80.3	79.3
2003	80.8	78.8
2004	81.3	79.0
2005	81.3	79.4
2006	81.6	79.8
2007	82.2	80.0
2008	82.3	79.1
2009	80.3	75.8
2010	80.5	75.1
2011	81.0	75.2
2012	81.4	75.8
2013	81.6	75.9
2014	81.2	76.7
2015	81.4	77.2
2016	81.4	78.0
2017	82.3	78.7
Sources: Statistics Canada, Labour Force Survey; U.S. Bureau of Labor Statistics, Current Population Survey.

These diverging trends in employment rates were the most pronounced among individuals without a bachelor’s degree. For example, employment rates of women with a postsecondary education below a bachelor’s degree rose 3 percentage points in Canada but fell 5 percentage points in the United States from 2000 to 2017 (Table 1). Employment rates of women with a high school education or less were about the same in 2000 and 2017 in Canada but dropped by 7 percentage points in the United States during that period. In contrast, employment rates of female bachelor degree holders changed little from 2000 to 2017 in both countries. More favourable changes in employment rates were also observed among Canadian men without a bachelor’s degree, especially those with a postsecondary education below a bachelor’s degree. Hence, while employment rates evolved in a fairly similar fashion in both countries for bachelors’ degree holders (Chart 4), they followed different trajectories for individuals without a bachelor’s degree (Chart 5).

Data table for Chart 4

Data table for Chart 4
Table summary
This table displays the results of Data table for Chart 4. The information is grouped by Year (appearing as row headers), Men, United States, Women, United States, Men, Canada and Women, Canada, calculated using percent units of measure (appearing as column headers).

Year	Men, United States	Women, United States	Men, Canada	Women, Canada
	percent
2000	94.3	81.2	90.8	83.2
2001	93.8	80.1	89.7	82.8
2002	92.6	80.0	89.3	82.6
2003	92.1	79.6	88.6	81.6
2004	92.5	79.4	89.6	82.6
2005	92.6	80.4	89.6	82.8
2006	93.5	80.9	90.6	83.0
2007	93.5	80.7	90.3	83.6
2008	92.8	81.0	90.2	82.9
2009	90.5	79.6	88.6	82.9
2010	90.4	78.8	88.8	82.5
2011	90.7	78.9	89.1	82.9
2012	91.3	79.1	89.6	83.3
2013	91.1	79.2	89.4	83.7
2014	91.6	79.9	89.0	83.2
2015	91.9	80.2	89.9	83.1
2016	91.9	80.7	89.9	83.2
2017	92.2	81.4	90.9	84.2
Sources: Statistics Canada, Labour Force Survey; U.S. Bureau of Labor Statistics, Current Population Survey.

Data table for Chart 5

Data table for Chart 5
Table summary
This table displays the results of Data table for Chart 5. The information is grouped by Year (appearing as row headers), Men, United States, Women, United States, Men, Canada and Women, Canada, calculated using percent units of measure (appearing as column headers).

Year	Men, United States	Women, United States	Men, Canada	Women, Canada
	percent
2000	86.7	71.4	84.5	71.5
2001	85.6	70.8	84.1	72.0
2002	84.0	69.0	84.0	73.3
2003	83.2	68.7	84.8	74.3
2004	83.9	68.5	84.9	74.9
2005	84.5	68.4	85.1	74.4
2006	84.8	68.6	84.8	74.8
2007	84.9	68.7	84.9	76.2
2008	82.9	68.2	85.4	76.1
2009	77.6	65.6	81.8	74.9
2010	76.8	64.5	82.2	74.8
2011	77.5	63.9	83.3	74.7
2012	78.7	64.0	83.5	75.1
2013	79.0	63.7	83.6	75.4
2014	79.9	64.3	83.5	74.6
2015	80.5	64.3	83.4	74.5
2016	81.4	65.2	82.9	74.6
2017	81.8	66.0	83.8	75.2
Sources: Statistics Canada, Labour Force Survey; U.S. Bureau of Labor Statistics, Current Population Survey.

What accounts for these different trends among individuals without a bachelor’s degree? Charts 6 and 7 provide descriptive evidence on this question for male workers. Chart 6 shows that the share of Canadian men without a bachelor’s degree employed in manufacturing declined substantially from 2000 to 2017, but that the share employed in construction rose significantly over the same period. As a result, the percentage of Canadian men aged 25 to 54 without a bachelor’s degree who were employed in either manufacturing or construction fell only slightly.

This was not the case in the United States. While the share of men employed in manufacturing declined quite steadily from 2000 to 2017, the construction sector did not play an offsetting role. After rising from 2000 to 2007, the share of American men employed in construction fell through the 2007-2009 U.S. recession and by 2017 had only recovered to levels last observed in 2000 (Chart 7). Overall, the share of American men aged 25 to 54 without a bachelor’s degree who were employed in either manufacturing or construction fell from about one-third in 2000 to about one-quarter in 2017.^{Note 5}

The different trends in the share of less educated men employed in construction resulted from the different employment trajectories observed in the two countries in this sector. While employment in construction increased 75% in Canada from 2000 to 2017, it was, by 2017, only 9% higher than in 2000 in the United States (Chart 8). 

Data table for Chart 6

Data table for Chart 6
Table summary
This table displays the results of Data table for Chart 6. The information is grouped by Year (appearing as row headers), Construction, Manufacturing and Construction and manufacturing, calculated using percent units of measure (appearing as column headers).

Year	Construction	Manufacturing	Construction and manufacturing
	percent
2000	9.6	20.1	29.7
2001	9.8	19.9	29.8
2002	10.0	20.0	30.0
2003	10.4	20.0	30.3
2004	10.5	19.9	30.4
2005	11.3	18.9	30.2
2006	11.6	17.9	29.5
2007	12.0	16.7	28.7
2008	13.2	16.1	29.3
2009	12.8	14.5	27.2
2010	13.3	14.3	27.6
2011	14.0	14.1	28.1
2012	14.2	14.3	28.5
2013	14.7	13.8	28.5
2014	14.5	13.6	28.0
2015	14.7	13.2	27.9
2016	15.3	12.5	27.8
2017	15.2	12.9	28.1
Note: The industries are based on the North American Industry Classification System (NAICS). Source: Statistics Canada, Labour Force Survey.

Data table for Chart 7

Data table for Chart 7
Table summary
This table displays the results of Data table for Chart 7. The information is grouped by Year (appearing as row headers), Construction, Manufacturing and Construction and manufacturing, calculated using percent units of measure (appearing as column headers).

Year	Construction	Manufacturing	Construction and manufacturing
	percent
2000	14.3	18.8	33.1
2001	14.6	17.6	32.2
2002	14.3	16.7	31.0
2003	14.4	16.0	30.4
2004	15.3	15.3	30.6
2005	15.7	14.8	30.6
2006	16.4	14.9	31.3
2007	16.5	14.4	30.9
2008	15.3	14.0	29.3
2009	13.4	12.4	25.8
2010	12.7	12.2	24.9
2011	12.5	12.2	24.7
2012	12.4	12.3	24.7
2013	12.9	12.3	25.2
2014	13.8	12.0	25.7
2015	13.8	12.1	25.9
2016	14.2	11.9	26.2
2017	14.4	11.6	26.0
Note: The industries are based on the North American Industry Classification System (NAICS). Source: U.S. Bureau of Labor Statistics, Current Population Survey.

Data table for Chart 8

Data table for Chart 8
Table summary
This table displays the results of Data table for Chart 8. The information is grouped by Year (appearing as row headers), Canada and United States, calculated using index (2000=100) units of measure (appearing as column headers).

Year	Canada	United States
	index (2000=100)
2000	100.0	100.0
2001	101.9	102.9
2002	107.0	100.4
2003	112.9	102.7
2004	118.3	109.6
2005	126.7	114.0
2006	132.2	119.4
2007	139.7	120.8
2008	153.2	111.1
2009	147.4	98.9
2010	153.9	92.9
2011	160.4	92.5
2012	163.9	91.0
2013	169.8	94.4
2014	170.0	100.4
2015	169.9	101.3
2016	171.6	105.4
2017	174.6	108.7
Note: The industries are based on the North American Industry Classification System (NAICS). Sources: Statistics Canada, Labour Force Survey; U.S. Bureau of Labor Statistics, Current Population Survey.

Overall, Charts 6 and 7 suggest that differential movements in the shares of men employed in construction in Canada and the U.S. contributed to the divergence of male employment rates in the two countries. Table 2 provides further evidence on this question. It shows that the employment rates of Canadian and American men without a bachelor’s degree fell by 0.7 and 5.0 percentage points, respectively, from 2000 to 2017. The 4.2-percentage-point difference in employment rate changes is entirely accounted for by divergences in the shares of men employed in construction. While the share of Canadian men employed in construction increased by 5.6 percentage points, the share of American men rose marginally (0.1 percentage points).

The larger increase in the share of men employed in mining and oil and gas extraction observed in Canada―0.8 percentage point, compared with 0.2 percentage point in the Unites States― accounts for 12%^{Note 6} of the difference in the overall change in the employment rate of men. Consistent with Chart 2, differential movements in the shares of men employed in manufacturing did not contribute to the divergence in employment rates, as the share of men employed in manufacturing fell no more in the United States than it did in Canada.

Table 2 also sheds light on the different trends in employment rates observed among Canadian and American women without a bachelor’s degree. Employment rates increased by 3.8 percentage points among Canadian women while they declined by 5.4 percentage points among their American counterparts. Of the 9.2-percentage-point difference in the overall change in the employment rate of women, 3.9 percentage points—or 42%—is attributable to a larger increase in the share of Canadian women employed in educational services, health care and social assistance. Another 11% is accounted for by the larger decline in the share of American women employed in manufacturing.

It is important to emphasize that the numbers shown in Table 2 result from an accounting exercise. They do not take into consideration spillover effects, such as the extent to which higher employment of Canadian men in construction was driven by economic activity generated by the oil and gas sector. Hence, the causal impact of mining, oil and gas extraction on employment rate movements among men is likely to be greater than the 12% reported above.

The results presented so far reflect national averages and mask potentially important regional variation. As Table 3 shows, employment rate movements in Canada were not uniform across provinces. While employment rates of Canadian men without a bachelor’s degree fell by 0.7 percentage point from 2000 to 2017 nationwide, they fell by about 4 percentage points in Ontario and Alberta but rose slightly in Newfoundland and Labrador, Prince-Edward-Island, New Brunswick, Quebec and British Columbia. Likewise, employment rates of Canadian women with no bachelor’s degree increased by 3.8 percentage points from 2000 to 2017 nationwide, rose by about 12 percentage points in Quebec as well as Newfoundland and Labrador but showed no growth in Ontario, Manitoba, Saskatchewan and Alberta.

Movements in employment rates were more uniform across the United States. Regardless of the region considered, employment rates of men without a bachelor’s degree fell by between 4 and 6 percentage points from 2000 to 2017 (Table 4). The employment rates of their female counterparts dropped by between 3 and 7 percentage points during that period.

Given the importance of workers without a bachelor’s degree in explaining the overall differences in long-term trends in employment rates between Canada and the United States, a visual summary of Canada-U.S. differences in employment and wages for workers without a bachelor’s degree has been prepared. The infographic “A Canada-U.S. Comparison of Employment and Wages” is available in Statistics Canada — Infographics (11-627-M).

Wages

The more favourable labour market trends observed in Canada were not limited to employment rates. From 2000 to 2017, real median hourly wages of employees aged 25 to 54 increased by about 9% in Canada compared to 3% in the United States (Chart 9).

Stronger wage growth was observed in Canada for men and women of all education levels. The Canada-U.S. difference in wage growth was especially pronounced among male and female employees with a postsecondary education below a bachelor’s degree (for example those with a college diploma or a university certificate below bachelor’s degree): it amounted to roughly 15 percentage points (Table 5). In contrast, real wage growth among Canadian male bachelor degree holders was only 2 percentage points higher than that of their U.S. counterparts.

Data table for Chart 9

Data table for Chart 9
Table summary
This table displays the results of Data table for Chart 9. The information is grouped by Year (appearing as row headers), Canada and United States, calculated using index (2000=100) units of measure (appearing as column headers).

Year	Canada	United States
	index (2000=100)
2000	100.0	100.0
2001	98.8	101.1
2002	99.7	102.3
2003	99.4	103.9
2004	99.0	101.5
2005	100.7	99.8
2006	100.0	101.5
2007	101.7	100.2
2008	103.3	101.0
2009	106.6	102.2
2010	107.2	100.1
2011	104.1	98.3
2012	107.1	98.0
2013	106.6	98.8
2014	108.1	97.2
2015	109.7	99.7
2016	110.4	102.4
2017	108.7	102.7
Sources: Statistics Canada, Labour Force Survey; U.S. Bureau of Labor Statistics, Current Population Survey.

Among male and female employees without a bachelor’s degree, real wage growth was generally stronger in Canada than in the United States in all industries.^{Note 7} The cross-country difference in wage growth amounted to 15 percentage points or more in three sectors: construction, mining, oil and gas extraction, and public administration (Table 6). In contrast, it amounted to only 2 percentage points for men employed in manufacturing.

As was the case for employment rate movements, wage changes were less uniform in Canada than in the United States. For example, real median hourly wages of men with no bachelor’s degree grew 23% or more in the three oil-producing provinces of Alberta, Saskatchewan and Newfoundland and Labrador but increased by only 2% in Ontario (Table 7). In contrast, real median hourly wages of American male workers with no bachelor’s degree fell by between 2% and 10%, depending on the region considered.

Conclusion

The Canadian and U.S. labour markets have experienced a number of economic shocks since the early 2000s. The magnitude of some of these shocks has differed across the two countries, particularly with respect to the relatively larger negative adjustments in the U.S. housing market and construction industry, together with the positive impact of the resource sector in Canada.

As a result, this article shows that among individuals aged 25 to 54, both real wages and employment rates evolved more favourably in Canada than in the United States from 2000 to 2017. This largely reflects differing trends among workers without a bachelor’s degree in the two countries over this period.

The more favourable wage and employment rate movements observed in Canada at the national level mask important regional differences. For example, men without a bachelor’s degree residing in Ontario experienced declines in employment rates that were similar to those of their counterparts in many U.S. regions.

The factors that underlie the cross-country differences in these trends remain to be identified. Given the similarity and proximity of the two economies, labour-saving technological changes are unlikely to account for a substantial portion of these cross-country differences. Because the drop in manufacturing employment was―in percentage terms―roughly the same in both countries, it is also unlikely to explain much of these differences. Neither is the slight decline in unionization rate observed in both countries over the 2000-to-2017 period. Whether cross-country differences in the trajectories of real minimum wages, if any, played a role is currently unknown. Likewise, the degree to which the different magnitudes of the shocks experienced in the construction and resource sectors explain these cross-country differences has yet to be determined.

Appendix

Data sources

This article is based on data from Statistics Canada’s Labour Force Survey (LFS) and from the U.S. Bureau of Labor Statistics’ Current Population Survey (CPS).

The LFS and CPS are monthly household surveys. Their main purpose is to provide information on recent trends in employment and unemployment (Bender 2016; Bernard and Usalcas 2014). The monthly sample of the LFS is approximately 56,000 households, while that of the CPS is about 60,000 households. The monthly microdata for the 2000-to-2017 period were used to produce the annual data shown in this article.

The two surveys are mostly similar. There are minor conceptual differences between them, but most are related to the classification of respondents as either unemployed or out of the labour force. These differences are therefore unlikely to have an impact on an analysis of employment and wages.

Both the LFS and the CPS are panel surveys. In the LFS, households remain in the sample for a period of six months. In the CPS, households are sampled for an initial four months, excluded for a further eight months, and then return to the sample for another four months.

In the CPS, the questions on wages earned during the reference week are asked only at the end of each of the two periods when respondents are in the sample. The data files containing the information about these households when they leave the panel are called the ‘outgoing rotation group’ (ORG) files. These are the files used in this study. Lemieux (2006) shows that the wage information contained in these files is more reliable than that produced by CPS supplements conducted annually in March. These supplements also contain questions about the earnings and wages of respondents, but the questions pertain to the past year rather than the reference week.

Since wages are not disclosed beyond a certain value in the available ORG files, it is not possible to perform an analysis based on average wages. For this reason, median wages are used to document wage movements.

References

Bender, R. 2016. Measuring Employment and Unemployment in Canada and the United States—A Comparison. Labour Statistics: Technical Papers, no. 2015002. Statistics Canada Catalogue no. 75-005-M. Ottawa: Statistics Canada.

Bernard, A., and J. Usalcas. 2014. The Labour Market in Canada and the United States Since the Last Recession. Economic Insights, no. 36. Statistics Canada Catalogue no. 11-626-X. Ottawa: Statistics Canada.

Beaudry, P., D.A. Green and B. Sand. 2012. “Does industrial composition matter for wages? A test of search and bargaining theory.”  Econometrica 80 (3): 1063–1104.

Charles, K.K., E. Hurst, and M.J. Notowidigdo. 2016. “The masking of the decline in manufacturing employment by the housing bubble.” Journal of Economic Perspectives 30 (2): 179–200.

Lemieux, T. 2006. “Increasing residual wage inequality: Composition effects, noisy data or rising demand for skill?” The American Economic Review 96 (3): 461–498.